The crash in the value of sterling against the dollar sent shockwaves through the fashion sector this week.
As Drapers went to press, the pound had fallen to US$1.77 against the dollar – sending retailers and suppliers into a quandary over their spring 09 pricing. The majority of retailers and wholesalers buy goods from the Far East in dollars.
One fashion buying and merchandising expert said: “To absorb the added cost of this will mean retailers reviewing their sourcing strategies. You may have to renegotiate with suppliers or address your fabric base and source differently.”
A supplier added: “I had to revise my prices to the multiples this week to factor this in and we know it’s going to get worse. It’s hard to know what to do.”
Jane Galvin, industry commercial director for the retail and wholesale team at Barclays Bank, said: “This is a worrying time for retailers and wholesalers. It is fair to say they are facing weakening margins and our experts are predicting that there will be further deterioration in the pound.”
She added: “Its not just larger multiples that can book [currency] rates six, 12, or 18 months in advance; medium businesses can do this too. People can protect themselves for the whole of 2009, which we expect to be much worse in trading terms.”
Separately, Paul Alger, executive director at UK Fashion Exports, said the currency fluctuations would be a case of swings and roundabouts for UK brands looking to capitalise on exports. He said: “Generally, it will be good for exporters because they will look cheaper than major Italian brands. But the majority of these businesses manufacture overseas and will be buying in more expensively than expected.”